AppleInsider is reporting that AT&T is rushing to get a “massive” upgrade to its wireless network to get ready for an iPhone upgrade in June that’s expected to result in a tenfold increase in traffic. The site says it’s installing powerful new Juniper routers and that their performance looks promising. Sounds good, if it’s true.

Oddly enough, AppleInsider doesn’t speculate on why new iPhones might lead to such a gigantic leap in traffic. It does say that the Junuper routers are optimized for streaming video, and it’s true that the recent Apple press event about the upcoming iPhone 3.0 software included the news that it offers new features to help apps deliver pleasing streaming video experiences. Current iPhones do some video streaming over AT&T’s network already–via the built-in YouTube app and the TV.com one, for instance–but maybe Apple and AT&T expect more compelling video content in higher quantities come summer. (What if Hulu was available on the iPhone? Or the rumors of Apple letting you stream video you’ve bought from the iTunes Store are true, and include the ability to do so to an iPhone?)

One other scenario that might lead to gigantic increases in iPhone data usage would be the arrival of a cheaper iPhone. Apple wouldn’t be selling iPhones in anywhere near the quantities it is if the phone still sold for its original starting price of $499–and if there were a true $99 iPhone in the wings, you gotta think that iPhone sales would explode again. (Better still if AT&T were to cut the price of unlimited data below the current thirty bucks a month.)

Rumors about new cheapo iPhones are, appropriately, a dime a dozen, and most don’t sound very convincing. Working on nothing other then intuition, I still think the most likely upcoming cheap iPhone would be…the current iPhone 3G. Apple could bring cool new iPhones to market at the current $199 and $299 contract prices, then keep this existing models on the market at new low prices. There’s almost certainly enough profit margin built into iPhone 3G pricing to let the company sell an 8GB model for $99 without going broke. And that would be a heck of a lot more appealing than an undersized model that wasn’t capable of running iPhone apps.

Any other theories? Of course, as a selfish current iPhone owner, I’m less interested in AT&T building out its infrastructure to accommodate more iPhone users, and more interested in it doing so to provide better service to those of us who already have iPhones…